News

iTunes subscription service needed for Apple to stay on top?

By Dennis Lloyd ● Tuesday, June 1, 2004

“What should Apple do to stay on top? Plenty. For starters, it needs to embrace the new ways consumers want to buy music. While the iTunes store offers 99 cents downloads, Apple has yet to provide a subscription service for folks who want to listen to whatever they want for a monthly fee. To stare down a raft of new music players, Apple needs to broaden its product line. It should consider forming partnerships to add iPod technology to cell phones and other futuristic devices. And it needs to address nagging quality problems, such as scratchy-sounding headphones and disappointing battery life. While most buyers love their iPods, Apple has to hit a higher standard to keep its market share, premium prices, and good buzz it has with buyers.”

Comments

1

Great, another armchair jockey. Apple specifically laughed at subscription services and other devices, and it has obviously got a good eye for the ipod’s future without this guy creating FUD.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 10:48 AM (CDT)

1

I wouldn’t mind if Apple launched a subscription model alongside the per-track payments, but NOT as a replacement. I just don’t buy often enough to justify a subscription, but if it’s a better deal for some other customers, then they can go for it.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 11:05 AM (CDT)

1

I agree with Jon. I think a subscription “option” would be a good move. It would allow folks to listen to albums before paying for them to see if they like them.

One thing that subscription services don’t do and probably should is some kind of incentive. Each month, give the subscriber a song of their choice. Or maybe give them a song if they buy songs that they had previously listened to using the subscription.

Basically, give the user a feeling that they are getting a little more value for their subscription price than other services…

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 11:14 AM (CDT)

1

I agree that BOTH would be good, and switching would be bad. We’ve already seen what a dud Rhapsody is.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 11:24 AM (CDT)

1

“cell phones and other futuristic devices”

uh… hello. A cell phone is futuristic? How long have they been around now? Yeah. he’s credible.

Where’s my cellphone..er… flying car, dammit???

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 11:29 AM (CDT)

1

Subscription service isn’t going to happen…EVER. Too many others have tried it and failed. Sure, there are those that like that sort of service, but not enough that would better Apple’s position in any way. Users want to “own” their songs, not rent them.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 11:39 AM (CDT)

1

“cell phones and other futuristic devices”

What like our phasers and jet packs?

This guy is a quack.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 11:44 AM (CDT)

1

I must concur with noway. In fact, the failure of subscription services opened the door for Apple to come in with 99 cent songs. The keys to continued success are going to be price competitiveness in hardware and songs combined with fierce protection of the iPod’s image. The road ahead will be tough for Apple and there will be erosion of market share.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 11:52 AM (CDT)

1

If you look to see how much business 99 cent tracks do as compared to subscription based services, expanding their line would not really bring in enough business to even set up such a service. Can you imagine the overhall they’d have to do to iTunes to even allow such a thing to happen?

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 11:59 AM (CDT)

1

I love reading poorly researched articles from people whose whole theory goes back to what happened with Apple vs Microsoft in the 80’s. And anybody who brings up “poor battery life” as an issue obviously isn’t informed.

Subscription services are flawed in their nature. Other companies can do it because they have no where near the selection that the ITMS has with more than 500,000 albums. Plus, they usually involve FM-quality streams instead of CD quality - which is really important to Apple.

I suppose it couldn’t hurt, but nobody is even close to catching Apple…so why should they worry about what the other companies are doing?

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 12:01 PM (CDT)

1

Subscription service is just plain stupid. Not Gonna Happen.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 12:25 PM (CDT)

1

I agree with the integration with other devices. I have a 40GB iPod and a Treo 300 cell/palm device. It probably won’t be viable anytime soon. Battery life would suck, and the device would have to be big. But technology continues to miniaturize.

The subscription service will probably have to also depend on what the contracts with the record companies look like. If the DRM can be cracked, so could a subscription service and that would mean someone could own a bunch of music for a small price.

Personally, I prefer to own my music outright.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 12:32 PM (CDT)

1

Screw the subscription mularky. Like many have said, it’s already a failed endevour. Buy XM radio if you care for subscription.

What Apple should consider doing is allowing a full song preview insead of just 30 seconds. Even be able to drag previews to a folder like you can now. That way you could listen to the listen to songs on the computer in any order you want without paying anything, but if you want to take it with you or burn it you gotta pony up 99cents for the song.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 1:20 PM (CDT)

1

“It should consider forming partnerships to add iPod technology to cell phones and other futuristic devices.”

Uh..How are you going to add “ipod technology” to a cell phone? You’d have to put a hard drive in it. Then add a big battery (takes a lot for the phone, hard drive, color display, etc).

Face it, the market has shown in the past that “convergence” devices simply don’t work. Case in point: Nokia N-Gage. Case in point: MC3 Camera/Mp3 player. Perhaps the only device that has suceeded is the camera/cell phone combination. However, no one is giving up their digital camera for these low resolution, limited storage camera phones.

In Sum: Apple knows what it is doing; the article writer doesn’t have a clue.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 1:35 PM (CDT)

1

I’m not positive but by subscription service he might have ment you pay a flat monthly fee and can own as many songs as you want. I don’t think he meant you’d only rent them for a month. I do think that sooner or later this is how you’ll be able to buy music. Just look at phone service. Every company (not cell) offers a monthly price for unlimited phone usuage. The same thing will happen for music some day. I know I’d be a lot more inclined to spend say $20-30 a month to get unlimited downloads versus paying .99 for each.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 1:41 PM (CDT)

1

I think the message in the article is to explore being diverse in this growing market segment. I don’t really agree with the whole “rent” music theory, but I do agree with expanding the platform to include other mobile platforms. I would love to shop for tunes or download from my iTunes library from mt cell phone.

Steve Jobs needs to keep pushing the envelope to keep the iPod on top where it belongs.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 1:45 PM (CDT)

1

How can allyou people say “subscription services are a failure” when the figures show the subs model is enduring, succesful, expanding, and lucrative.

THink about how little profit Apple make on each iTMS download compared to the easy money Real gets from each monthly Rhapsody download.

Apple has delivered, what, 70 million downloads? How many of them were paid-for, and how many free through Pepsi? Say total sold downloads is 50m. Profit from each? Maybe 2 cents.

Apple’s total profit so far? $1m!

How much does Rhapsody make per month? 450K subscribers paying $10 each. Say their licensing fee is 25%, overheads chew another 25%, and that’s a high estimate.

Rhapsody’s monthly profit? $2.25m

So on current numbers, Real could be clearing more profit per month from subs than Apple has managed *to date* with the iTMS.

That looks like a good business to me.

I think Napster is maximizing its opportunity by offering both downloads *and* subscriptions.

Just because Great Saint Steve Jobs says today that subs make no sense, a lot of people repeat this as gospel truth. How quickly will they change their tunes when Apple has a subs business?

Reminds of of 1984: “Eastasia is our friend! Pacifica is our enemy!... Eastasia is our enemy, Pacifica is our friend, Pacifica has always been our friend!”

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 2:31 PM (CDT)

1

um…. “The iPod, in contrast, works only with iTunes. “When you buy an iPod, you have one choice,” says Chris Gorog, CEO of Roxio Inc., which runs the rival Napster service…”

behold, another well researched article!

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 6:28 PM (CDT)

1

I don’t want to rent music, I want to buy music. PERIOD.

Whoever labeled this guy an armchair jockey abovem couldn’t have been more correct.

Posted by Dennis Lloyd in Irvine, CA on June 1, 2004 at 6:44 PM (CDT)

1

“I want to buy music. PERIOD.”

You think you’ve “bought” music from iTMS? You think you “own” those tunes?

Try selling one to somebody else.
Try gifting one to a relative.
Try bequeathing one as estate.

You will fail because they are not yours and you do not own them.

The biggest trick Apple has played on people is to convince them that they are not renting music but buying it.

In reality, what you are paying is an initiallicense fee of $1 for unlimited playback on Apple-licensed hardware. So as long as you continue to buy Apple products, hardware and software, you can enjoy “your” tracks. Those $$$s you spent for the iPod are the admission fee.

Bit like Rhapsody really. Except in that case, there is no lump sum admission fee and no per-track mini license fee but instead a lower, amortized flat monthly cost.